Judi's Blog

Tips for Pricing Your Home

2009-05-09T09:50:00.008-04:00

This is such a great blog from a Realtor in Sarasota, FL, I wanted to share it with you! Even though we are here in Louisville, this applies! Read and learn!

"What is market value?
International Valuation Standards defines market value as "the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arms-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion.”

What is not market value:
It is not the price you paid for the house plus improvements and real estate commissions.
It is not how much your friend, in-laws, attorney, accountant, sister with a real estate license, neighbor or anyone else thinks your house is worth unless they are willing to buy it at that price and you are willing to sell it at that price.
It isn’t what you paid for the home plus a needed or historical rate of appreciation.
It isn’t more than what your neighbor’s house sold for because you like your house better.

I have empathy for today’s seller since I recently sold a couple of rental properties that I owned. They closed in the third quarter of 2008 and sold for roughly 60% of the value that I could have sold them for in the market highs of 2005. So I know what it feels likes to lose equity. It is an ugly reality of the market we are in. Here are some things I kept in mind when I was establishing my asking prices.

Be objective
Yes, you are selling your home and all of the great memories and experiences that you have had but try to be as objective as you can. Don’t factor those great memories into the price tag of your home. Buyers are more concerned with location, quality, size and condition.

Forget about what your home used to be worth
Like the stock market, the real estate market changes daily. Homes sell, expire and new competition comes on the market. Real estate prices don’t move as quickly as stock prices but nonetheless the market does change. I am writing this in November of 2008 and just about everyone’s home was worth more three years ago. Concentrate on what your property is worth today and what it will be worth in the next six months, not last month or last year.

Don’t plan on finding a sucker
Many people hope that their Realtor can find that one sucker who is willing to pay more for their home than it is really worth. Does it happen? It sure does. Does it happen often enough for you to rely on? No.

What will your home be worth in the future?
This is a very important question since we are in a down trending market. I have seen so many people reject offers on their home only to accept much lower offers later because the value of their property declined.

One of the rental townhouses that I sold closed for $175,000. Three years ago an almost identical unit closed for $310,000. Part of the motivation to sell it was because I thought that there is a pretty good chance that it will sell for around $150,000 in the not too distant future.

I had a home listed for $1,200,000. We received an offer for $1,000,000 which I thought was market value and explained that to the seller. She rejected the offer and the buyers walked away. Roughly a year later she accepted an offer of $825,000. If you think home prices are going to fall further, price your home competitively from day one.

Analyze the market thoroughly
This is where a good Realtor can come in handy. I’ve worked along side some agents who put about five minutes worth of work into arriving at an asking price. In some cases that may work but most of the time it doesn’t. Look at the properties currently on the market, under contract, recently sold and expired. Many people forget to look at the expired listings. These are good to analyze to see what went wrong so you don’t make the same mistakes. How does your home compare with the recently sold properties? Again, make sure you are being objective.

More marketing does not justify overpricing
I do believe that good marketing is important in a bad market. You have to differentiate yourself from the thousands of other properties for sale. However, that does not mean that tons of print advertising, an open house every Sunday and thousands of Just Listed cards are going to sell an overpriced home. Great marketing may get a buyer in the door but that same buyer will look at your competition as well. Heavily advertising an overpriced home may only help sell your properly priced competitor.

Keep appraisals in mind
You don’t want to go through the hassle of an offer, negotiations, inspections and packing your belongings only to find out that your home did not appraise for the sales price and the deal is off. In a perfect world you can find three recently sold similar homes. Do your homework and establish an asking price based off of these three sales. Lending and appraisal guidelines have changed dramatically. Lenders are looking at appraisals closely so don’t figure on selling your home for a price that an appraiser cannot justify.

Get ahead of the market
In a quickly moving market you may need to make an adjustment based on market conditions. When the market was hot in 2004 and 2005 a lot of sellers were taking the last sale and adding 5-10% to that price and making that their asking price. And, it was working. Now, the opposite may be needed. Since the market is moving quickly to the downside you may need to take the last sales price and make your asking price that or 5-10% lower.

Be the best deal
This is not rocket science. Buyers simply want to buy the best house at the best price. Know your competition very well. Go with your Realtor and visit similar homes that you are in competition with. Once you see those properties it is easier to create value. In a down market you have to create a sense of value for buyers. They are so apprehensive about prices falling further that they simply won’t buy unless they feel that they are getting value.

Be prepared to lower your price
You may not get the correct asking price from day one. Sometimes it is difficult because of the market or lack of comparable sales. The initial asking price is just a starting point. Do not lock that number in your head. Make sure you lower your price before your house gets stale. If your home has been on the market too long many Realtors will stop showing it because they figure that you are not a realistic seller.

Are we in a tough market? Absolutely. Many of us have never seen a market like this before. Some Sarasota real estate prices have declined in the neighborhood of 50%. It is not a time for sellers to be stubborn about pricing. Buyers are driving this market right now.

If you are thinking about selling your home in a bad real estate market keep these tips in mind when establishing your asking price. You can have all of the marketing in the world but if you are asking too much for your home it most likely won’t sell."

I could not have said it better myself! Thanks to Marc Rasmussen for a great article. http://www.luxurysarasotarealestate.com/.

One more word from me. The Louisville, KY housing market is not seeing the decline that many other cities are experiencing around the country. In some areas of town the market is stable, but not appreciating, in others it is down 3.2% to even greater. It's all about location. Buyers here are looking for a deal and they are finding them. Getting the best price in your area means getting your home in tip-top condition and then staging it beautifully.

Negotiating 101

2009-04-14T17:20:00.010-04:00

If you are a buyer, with money to spend, no home to sell, and are pre-approved for a loan...lucky you! Your timing is great. The market is flooded with homes for sale, most homeowners realize that they cannot over-price their homes, and interest rates are as low as I ever remember. Negotiations can be tricky, so before you begin, here are some tips to consider.

1. Homework. Your Realtor will get you all this information.
What are the prices of comparable homes in the area?
What is the typical length of time those houses were on the market?
How many days has your "target" home been on the market?

2. Get to know the Seller's motivation. The seller or their agent may not tell you, but you can always ask.
What are the pressures on the seller of this home? A highly motivated seller will be far more willing to negotiate.

3. Keep your motivation to yourself.
Are you paying cash? If the sellers know this, they may think you are a person of means and can afford to pay a higher price.
Have the sellers overheard you walking around the house decorating?
Have you visited the home on several occasions, measuring and taking pictures? Visit twice at the most. Be prepared when you are at the first showing!

4. Have more than one choice for a home. Buying real estate is a huge purchase and should be treated as an investment, similar to purchasing stocks.
Do you have a back-up house?
Are you "in love" with the home? Never negotiate with your emotions. Use your head!
Have you tactfully let the sellers know that you are considering several properties?

5. Ego can kill a purchase.
Do you have a reasonable and flexible price range for the home? Sometimes buyers get so involved in the negotiations that they lose sight of the ultimate goal; to buy and move into the home of your choice. If this is the house you have chosen and you feel that the price is fair, don't let a thousand dollars prevent you from buying. I have seen buyers lose the house of their dreams because they got caught up in the process of negotiating and let their ego get in the way. The price may be a bit more than you hoped for, but if it is in your budget, and you feel the house is worth the money, strongly consider if you are willing to give a little.

Staging Your Home for a Quick Sale

2009-02-15T15:38:00.002-05:00

Staging your home for a quick sale
Before that first potential buyer enters your home make sure it is in "show condition"! You will not get a second chance! If a buyer isn't immediately impressed with your home, beginning at the door, you do not stand a chance of selling to them. Preparation is the key and it's as easy as 1,2,3.
1. Imagine that you have never seen your home. Drive up to it with a critical eye. Pay attention to the neighborhood, the neighbor's homes, your home's appearance. Are there cracks in your driveway, toys in the yard, peeling paint on the windows, dead flowers in a pot or garden, dirt in the foundation of your home? OR is your garden freshly mulched, new paint on the front door, newly sealed driveway and sparkling clean windows? Now that's the house a buyer will wants to see.
2. Get ready to move NOW! Before the house goes on the market, be sure you really intend to sell. You would be surprised how many people put their homes on the market simply to see if they can get an offer. They really don't care if it sells! As a Realtor, I try very hard NOT to list those homes. I want motivated sellers. They are reasonable about the market value of their home, and they are willing to take the steps necessary to make it sell quickly... that may mean packing up many of their possessions to make the house show off it's best qualities.
3. Clean like you've never cleaned before! Here are some of the things a buyer is thinking as they walk through your home: "What do I need to do to let my child crawl around on this floor?" , "Would I feel comfortable sitting on this toilet or in this tub?", Would I want to cook in this oven?". Walk around your home like a critical in-law...what do you see? Make it sparkle, from the windows to the base of the toilet!
Properly preparing to put your house on the market is the way to sell quickly, for the most money, in the shortest amount of time! If you need help preparing your home, contact me at http://www.thechristopherteam.com/. It's my specialty.